Krungsri Securities (KSS) maintains a ‘Buy’ recommendation on Thai Union Group Public Company Limited (SET: TU), with a target price of THB 14.20 per share, projecting the company to report a normalized profit for 2Q26 of approximately THB 1,143 million, representing a decrease of 5% year-on-year and 8% quarter-on-quarter—slightly better than previous estimates.
The primary factor is a record-high gross profit margin of 19.8%, driven by strong margin growth in the canned seafood business, supported by an improved product mix and lower tuna raw material costs compared to current market prices. This advantage was partially offset by higher SG&A expenses, which rose to 14.6% of sales due to increased marketing and transportation costs.
Looking ahead to Q3, normalized profit is anticipated to remain stable year-on-year but improve quarter-on-quarter, reflecting high seasonality for exports. New and higher-margin products tend to perform well during this period.
While raw material costs may gradually increase due to new stock entering the inventory, these pressures are expected to be mitigated by upward pricing and continued product mix improvements. SG&A expenses are likely to remain elevated at levels similar to 2Q26, primarily due to ongoing high marketing expenditures.
For 6M26, normalized profit accounts for around 47% of the full-year 2026 forecast of THB 5,135 million, a 19% increase year-on-year. Krungsri expects the second half of 2026 to outperform the first half, bolstered by the depreciation of the Thai baht, easing tensions in the Middle East—resulting in reduced energy and transport costs—and effective raw material cost management.
TU forecasts that tuna prices will decline quarter-on-quarter in 3Q26 and is confident that the current stock does not include high-cost inventory, which should help to maintain margins throughout the remainder of the year.
As of 2:24 PM (Bangkok time) on Monday, the share price of Thai Union Group surged 0.85% or THB 0.10 to THB 11.90, with a trading value of THB 76.51 million.
